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- Explain in detail the autocorrelation consequences in assumption of the OLS estimators.How to test the presence of autocorrelation.Assume that the average or mean monthly household consumption expenditure for Malaysia rose from RM3,578 in 2018 to RM4,033 in 2020, growing 6% per annum at nominal value, according to the statistics department. However, in terms of real value — which refers to the constant price using the Consumer Price Index with the base year 2014 as the deflator — annual growth rate is 3.9% for the same period, mentioned on its Household Expenditure Survey Report 2020. a) Suppose that consumer spending initially rises by RM5 billion for every 1 percent rise in household wealth and that investment spending initially rises by RM20 billion for every 1 percentage point fall in the real interest rate. Also, assume that the economy’s multiplier is 4. i. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by two percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? ii. In what…
- Give an economic relationships ( with one response and one explanatory variable) in which correlation is possible. Discuss why autocorrelation exist in the relationship.If the annual rate of world oil consumption t years after 1970 is modeledby the equation R(t) = 16.1e^.07t (billions of barrels per year), how much total oil (net change) was used between 1976 and 1980?In the formula ke >= (D1/P0) + g, what does (D1/P0) represent?
- Suppose that a coffee producing firm estimated the following regression of thedemand for its brand of coffee:Qc = 1.5 − 3.0Pc + 0.8Y + 2.0Pb − 0.6PS +1.2 Awhere Qc = sales of coffee brand C, in dollarsper pound Pc = price of coffee brand C,in dollars per poundY = personal disposable income, in millions of dollars per yearPb = price of the competitive brand of coffee, in dollarsper pound Ps = price of sugar, in dollars per poundA = advertising expenditures for coffee brand C, in hundreds of thousands ofdollars per year.Suppose also that this year, Pc = $2, Y = $2.5, Pb = $1.80,Ps = $1 and A =$1.a. Interpret the results of the estimated demand.b. Compute point price elasticity of demand for the firm’s brand of coffeewith respect to its price.c. Compute the cross-price elasticity of demand for coffee with respect to theprice of competitive coffee brand b.d. At the current price level, would it be viable for the firm to increase the pricelevel of its brand of coffee? Support your answer.…Q. Rubax, a U.S. manufacturer of athletic shoes, estimates the following linear trend model for show sales: Qt = a + bt + c1D1 + c2D2 + c3D3 Qt = sales of athletic shoes in the tth quarter t = 1, 2,..., 28 [2014(I), 2014(II),....,2020[IV)] D1 = 1 if t is quarter I (winter); 0 otherwiseD2 = 1 if t is quarter II (spring); 0 otherwiseD3 = 1 if t is quarter III (summer); 0 otherwise The regression analysis produces the following results: a. Is there sufficient statistical evidence of an upward trend in shoe sales? b. Do these data indicate a statistically significant seasonal pattern of sales of Rubax shoes? If so, what is the seasonal pattern exhibited by the data? c. Using the estimated forecast equation, forecast sales of Rubax shoes for 2021(III) and 2022(II). d. How might you improve this forecast equation? Thank you!Explain the relationship between these two formulas: Y = C + I + G + EX – IM S = (Y – T – C) + (T – G)
- Explain the relationship that economic variables can have with businesscycles. These have both direction and timing. Give an example economicvariable of each combination of direction timing. Of these two attributes, ifyou had exclusive access to a reliable variable, which relationships wouldyou want this variable to have for forecasting purposesAn American retailer purchased 100 pairs of shoes from a company in Mexico in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016. In which quarter(s) does(do) the value of the shoes add to U.S. GDP? O the third but not the second quarter O the second quarter but not the third quarter O the second and third quarters O neither the second nor the third quarter Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.According to Exhibit A-5, what is the relationship between the price per pizza and the quantity of pizzas purchased? a. Direct b. Inverse c. Complex d. Independent
